After weeks of talks, Air France-KLM finally concluded terms with banking institutions and the French government over financial support. Today, the group announced that it is set to receive €7 billion. This funding will help Air France through the impact of the COVID-19 pandemic and prepare for the future.

Air France Plane Runway Getty Images
Air France has been forced to suspend most of its services due to the spread of the virus. Photo: Getty Images

How are the funds being sourced?

According to a press release, the support is split between two components:

  • A €4 billion state-backed loan, granted by a syndicate of six banks. The government is guaranteeing up to 90 percent of the loan, which has a maturity of 12 months. Additionally, it has two consecutive one-year extension options.
  • A €3 billion direct shareholder’s loan from the state, with a maturity of four years. There are also two consecutive one-year extension options.

The funding will need to be cleared by the European Commission. However, with most of Air France's aircraft currently grounded due to global travel restrictions, the money will no doubt go a long way during the passenger downturn.

Air France, Airbus A380, Retired
There will also be plenty of Airbus A380 aircraft heading their way to retirement homes this decade due to carriers choosing to operate more efficient models. Photo: Getty Images

Grateful board

Both Air France-KLM chair Marie Couderc and chief executive Benjamin Smith are thankful to the government of France and the group's banking partners during these uncertain times. Couderc states that the move highlights the firm's crucial role in servicing France and the Netherlands. On the back of this support, she vows that all board members and employees will make sure to prove themselves worthy.

Additionally, Smith is eager to help the company progress once it survives the current crisis. This aid will help it bounce back when the time is right.

"This aid, along with the Group's action plan, will enable us to withstand this crisis and foresee the future of Air France-KLM with ambition and determination," Smith said in the press release.

"We are a strong Group and we are united in face of this crisis. I would like to once again salute the exceptional commitment of our employees for their dedication to the repatriation of our fellow citizens, the transport of medical equipment, and maintaining the essential links with territories.”

The legacy continues

While Air France secures its funding, the Dutch state is also set to confirm its support terms for KLM. Discussions between the two parties are still ongoing. Still, with the flag carrier of the Netherlands holding such a noticeable presence in the country, a healthy cash injection can be expected.

Air France KLM shares getty images
Air France’s domestic network has been operating at a loss for a few years now, so an overhaul is not a surprise. Photo: Getty Images

Altogether, there will be plenty of Air France-KLM staff members glad to hear that the group has a strong backing. Both arms of the enterprise have a massive influence in their respective countries. Air France has been operating since 1933, while KLM celebrated its 100th anniversary at the end of last year. Therefore, the legacy will last even longer with the help of these aid packages.

Simple Flying reached out to Air France-KLM for comment on the support that it will receive. We will update the article with any further announcements.

What are your thoughts on the confirmation that the group will get €7 billion in funding? Let us know what you think of the news in the comment section.